Median home price tumbles to 6&#189;-year low

Foreclosures drive steady rise in sales across the county

San Diego's median home price fell sharply again last month to $305,000, and foreclosures outnumbered nondistressed home sales for the first time, MDA DataQuick reported yesterday.

A 5.7 percent drop in the median price from October brought prices to their lowest level since April 2002. Since the peak of $517,500 in November 2005, the median has dropped 41.1 percent.

Of the 2,411 resales that closed escrow, 52.1 percent had gone through foreclosure in the previous 12 months. Overall sales were down 25.7 percent from October, the highest October-November drop in 20 years of DataQuick monitoring.

DataQuick analyst Andrew LePage said the monthly decline was accentuated because there were only 17 business days in the month, compared with the usual 19, while October counted 22 such days.

“It was not a blockbuster November, if you adjust for the unusually shortened month in which deals could close,” LePage said. “All things considered – some of the worst financial news in general – it wasn't that bad.”

Besides resales, there were 262 newly built homes or condominium conversions that sold in November, bringing the total for the month to 2,673, 11.4 percent higher than in November 2007. Sales have been rising on a year-over-year basis since July, after falling for 40 consecutive months.

The major factor behind the decline in prices continued to be the prevalence of low-priced foreclosures, which are driving down the overall median – the midway point of all sales, with half above and half below.

Paul Habibi, a lecturer at UCLA, said he expects San Diego prices to continue falling as foreclosures continue.

“If I had to guess, I would probably predict 5 (percent) to 7 percent before we hit bottom,” Habibi said, a decline that would bring the median down to around $275,000.

Habibi said the declining housing market, plagued by owners who can't afford resetting mortgage payments, is now also feeling the effect of the recession because owners have lost their jobs and watched their home equity slide with the general housing value downturn.

“It's really a negative equity problem and decline in the ability to pay that has exacerbated the issue,” he said.

Looking to 2009, Habibi predicted that rising unemployment could lead to rising apartment vacancies, as renters double up or move back home with their parents. An increase from 3 percent to 5 percent in vacancy rates can translate into a 15 percent to 20 percent decrease in rents as landlords rush to fill empty apartments to cover costs.

Against these gloomy prospects, Erik Weichelt, incoming president of the San Diego Association of Realtors, reported that agents are keeping busy, as falling prices are translating into greater affordability, particularly for first-time buyers.

“We feel the trend lines improving by the folks we see out there working, in conversations, in caravans, people at open houses,” Weichelt said.

Other indicators back up Weichelt's observations. The number of active listings stood yesterday at 16,028, down 4.8 percent from this time last month and off 22.2 percent from mid-December 2007, according to his association.